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The Minnesota Supreme Court respected a foreign entity’s federal check-the-box election for the purpose of determining which entities were included in the Minnesota combined franchise tax reports. The court held that including the income and apportionment factors of a foreign entity that elects under federal tax law to be disregarded as a separate entity did not violate Minnesota’s water’s edge rule. The court determined that the federal treatment as a disregarded entity also meant that it was disregarded for Minnesota franchise tax purposes, and it was therefore treated as part of its domestic parent. Ashland Inc. v. Minnesota Comm’r of Revenue, No. A16-1257 (Minn. Aug. 2, 2017).

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